Atherton-Newport Picks Up 1,215 Units for $114M

SEATTLE- Atherton-Newport Investments LLC of Irvine, CA, this week acquired seven Puget Sound apartment properties for $114 million, marking the largest acquisition in its history. Spread between Everett, WA north of Seattle and Federal Way, WA to the south, the properties contain a total of 1,215 units. Atherton-Newport founder Ashish Khatana tells GlobeSt.com the properties' average occupancy is in the low 90% range.

Atherton-Newport officials say the properties are underperforming and will be rehabilitated and repositioned. The goal is to capitalize on the region's increasing demand for quality rental units resulting from job growth, condominium conversions, reduced new apartment development and the increasingly un-affordable single-family home. In 2005, for the same reasons, Atherton-Newport acquired two other Federal Way properties, the 156-unit Village at the Lake and the 78-unit Redondo.

"This Seattle portfolio acquisition marks our largest portfolio investment nationwide to date," says Khatana, whose firm specializes in value-add investments and entitling land for development. "The fact that we have returned once again to Seattle for acquisition activity is a direct reflection on what we see as a ripe investment market for multifamily product."

In further explaining the new opportunity, Atherton-Newport officials cite a 2005 year-end report on the greater Seattle-Tacoma area published by Hendricks & Partners that speaks of "Puget Sound adding jobs and residents at a pace not seen since the 90's." The study also states that total non-farm employment expanded at a rate of 3.4%, or 46,000 jobs, over the course of 2005.

"Obviously the market is improving," says Khatana. "In addition, the properties have been under managed and undercapitalized, so we think the combination of new management, $10 million of capital improvements and the improving job market is a good story."

John Walsh of Marcus & Millichap brokered both sides of the off-market transaction. "The deal was never listed; I had relationship with ownership and they were looking to sell. They said 'at this price were a seller' and I brought them a group willing to pay that price."

Neither Khatana nor Walsh would name the sellers. Local sources tell GlobeSt.com the seller was a syndicator. Each property was held under different partnerships that had the same general partner and different limited partners. The general partner in each case was Rhoda Altmon, who could not be reached for comment.

The seven communities acquired by Atherton-Newport are as follows:

• Woodside Crossing Apartments: A 216-unit complex located in Everett at 420 85th Pl. SW, one mile west of Boeing Co. headquarters.
• Woodtrail Village Apartments: A 300-unit complex located in Federal Way at 1901 SW 320th St., three miles west of Interstate 5 and a half mile south of Highway 509.
• Steel Lake Apartments: A 51-unit complex in Federal Way at 31220 28th Ave. S., adjacent to Interstate 5.
• Keeler Creek Apartments: A 100-unit complex located in Lynwood, WA, at 16604 48th Ave. W. , near Interstates 5 and 405 and Alderwood Mall.
• Summer Mill Apartments: A 124-unit complex located in Bothell, WA, at 16520 North Road, near Interstates 5 and 405 and Highway 427.
• Pacific Pointe Apartments: A 249-unit complex located in Kent, WA, at 25701 27th Pl. S. in Kent, between Interstate 5 and State Route 99.
• Country Home Apartments: A 175-unit complex located in Kent, WA, at 22440 Benson Rd. SE, adjacent to Highway 515.